[The following information applies to the questions displayed below.] Astro Company sold 22,500 units of its only product and reported income of $60,000 for the current year. During a planning session for next year's activities, the production manager notes that variable costs can be reduced 45% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $155,000. Total units sold and the selling price per unit will not change. ASTRO COMPANY Contribution Margin Income Statement For Year Ended December 31 Sales ($55 per unit). Variable costs ($50 per unit) Contribution margin Fixed costs Income $ 1,237,500 1,125,000 112,500 52,500 $ 60,000 - Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
![[The following information applies to the questions displayed below.]
Astro Company sold 22,500 units of its only product and reported income of $60,000 for the current year. During a
planning session for next year's activities, the production manager notes that variable costs can be reduced 45% by
installing a machine that automates several operations. To obtain these savings, the company must increase its annual
fixed costs by $155,000. Total units sold and the selling price per unit will not change.
ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales ($55 per unit)
Variable costs ($50 per unit)
Contribution margin
Fixed costs
Income
1. Compute the break-even point in dollar sales for next year assuming the machine is installed. (Round your answers to 2 decimal
places.)
Contribution margin
Contribution Margin Ratio
Numerator:
Contribution margin per unit
$
1
Fixed costs per unit
$ 1,237,500
1,125,000
112,500
52,500
$ 60,000
$
Denominator:
Selling price per unit
105.00
$
1
Break-even point in dollar sales with new machine:
Numerator:
1
1
Denominator:
Variable costs per unit
10.00 Per unit
55.00
=
=
=
=
Contribution Margin Ratio
Contribution margin ratio
190.91%
Break-Even Point in Dollars
Break-even point in dollars](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe4ef7d4e-7bd8-47a7-b82d-4b0aca1efaff%2Fb86860dc-b6f9-4bfa-80b1-985207696310%2Fj472var_processed.jpeg&w=3840&q=75)
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